Crowdstreet is the best real estate crowdfunding platform
Over the past few months, I've noticed a trend in CrowdStreet deals becoming oversubscribed minutes after they become available to invest. These aren't small deals either, some of them raise well over $10 million. Crowdstreet even sends an email like this for deals that are likely to be oversubscribed.
Thank you for your interest in XYZ deal. We're writing you because we want to set expectations and prepare
investors for the likely event that this offering will become fully subscribed. Please see the bullets points
below, and continue reading for more details.
CrowdStreet appears to have the best deal flow of any commercial real estate platform out there. Over the last few months, they've had several deals a week raising between a few million to 10s of millions of dollars. I haven't seen this level of investing frenzy on any other realestate crowdfunding platform.
Deal flow is probaby the single best measure of success for a crowdfunding platform. Crowdstreet is a marketplace and marketplaces have strong network effects:
- More deals is better for investors because it gives investors choice and sponsors must compete for investors money. This increases the quality of sponsors.
- More investors means more capital to invest.
- More capital means sponsors will have an easier time raising money and deals close faster.
- Faster deal closing reduces timeline risk for fund raising which makes it a better platform for sponsors, which brings more sponsors with bigger deals to the platform closing the posstive feedback loop.
Network effects not only create a positive feedback loop, they also create a stronger and stronger barrier to entry:
- If you're an investor and crowdstreet already has all the best sponsors, why would you waste time scouraging other platforms for deals?
- If you're a sponsor and crowdstreet has the most investor capital and fastest deal closing times, why would you risk raising money on any other platform?
If 2015 - 2020 was when crowdfunding platforms blossomed thanks to the passing of the jobs act in 2012 (it took a few years for crowdfunding platforms to get off the ground), I predict 2020 - 2025 will be when crowdfunding platforms start to consolidate as network effects of large platforms start to dominate and weaker platforms like RealtyShares close down.
Do know of another crowdfunding platform that has strong deal flow? I'd love to hear about it, shoot me a message at mrcouchfi at gmail.com.